Cabinet approves spectrum base price; to fetch Rs 48,000 cr
New Delhi: The Cabinet Monday fixed the minimum price for selling telecom spectrum at up to about half the rate set at the previous auction to net at least Rs 48,000 crore in revenue from the sale planned in January.
The Cabinet headed by Prime Minister Manmohan Singh fixed the start price for the sale of spectrum in the 1800 mega-Hertz band at a pan-India rate of Rs 1,765 crore per MHz, about 26 percent lower than the base price in the March sale.
For the 900 MHz band, it approved a rate about 53 percent lower than the previous auction price.
"The Cabinet approved the spectrum sale price as recommended by an EGoM (Empowered Group of Ministers)," a top official said.
The EGoM on telecom, headed by Finance Minister P Chidambaram, had suggested fixing the base or minimum price for the auction of spectrum in the 1800 MHz band at a 15 percent higher rate than suggested by telecom regulator TRAI.
In doing so, it went by the recommendation of the Telecom Commission to auction spectrum in the 1800 MHz band at a minimum pan-India price of Rs 1,765 crore per MHz against the TRAI-suggested rate of Rs 1,496 crore.
The EGoM had also accepted a 25 percent higher base price for premium 2G spectrum in the 900 MHz band than what was suggested by the Telecom Regulatory Authority of India (TRAI).
The government has decided to auction 403.2 MHz of 2G spectrum in the 1800 MHz frequency, which at the base price finalised by the Cabinet, amounts to about Rs 36,385 crore.
About 46 MHz of spectrum in the 900 MHz band held by Bharti Airtel, Vodafone and Loop Mobile in Delhi, Mumbai and Kolkata will also be auctioned as their licences are due to expire in the last quarter of 2014.
At the base rate finalised by the Cabinet, the spectrum in the three metros may fetch about Rs 12,300 crore.
Together, the 900 MHz and 1800 MHz band airwaves are valued at about Rs 48,685 crore.
The government has provisioned garnering Rs 40,874.5 crore from spectrum revenue in the Budget, including upfront money from the auction and various fees levied on airwaves used for commercial mobile communications.
Successful bidders, however, will have the option of paying the spectrum price in instalments.
If the entire spectrum is sold at the base price and bidders opt to pay in instalments, the government may get only about Rs 15,000 crore in this fiscal from the auction.